Loan Companies Get Big Stick Treatment From Government
Following the Chancellors of the Exchequer’s pre budget report on Monday (24th November) this week and the announcement that the Government will inject a sum of £100 billion into the UK banking sector as part of the bank recapitalisation scheme to help restore liquidity to the market and allow banks to offer secured loans once more, the treasury has announced that it will be setting up a new lending panel, which will work closely with banks and building societies which are benefitting from the scheme.
The lending panel has been established to ensure that banks and building societies are actually doing what is expected of them and offering new loans to both businesses and individuals requiring a secured loan or mortgage and also that these loans are offered at competitive prices based on levels in 2007.
Apart from keeping a track of new loans, the panel will encourage a best practice principle across secured loan providers, to offer practical help and assistance to those borrowers who are facing financial difficulty and may be struggling to keep up with their home owner loan repayments.
The panel will be made up of members of the Government, lenders, consumer debt advice and trade organisations, financial regulators and the Bank of England and it will meet on a monthly basis, reporting back to the Chancellor and the Secretary of State.
The recent cuts in the bank base rate of interest and, more importantly perhaps, the inter bank lending rate (LIBOR), which has now fallen by more than 2 per cent since October this year, should also have a positive effect on lenders ability to grant new loans. Let’s hope that the new lending panel are able to use these factors to its advantage and force banks and building societies to start offering realistic secured loans at sensible rates and loan to value ratios.
